2021 took us all on a wild ride in the real estate market, as home sales increased at a rate not seen in over a decade, and home values skyrocketing nearly 20% up from the previous year. The reason for these inflated values was most certainly due to the pandemic causing increased demand for homes, with an inventory that could not match it. As a result, real estate appraisal requests also reached unprecedented levels, which led the industry to find new ways to navigate the mortgage appraisal process…many of which are here to stay.
A More Modern Approach to Home Appraisals
Inaccurate valuations in real estate appraisals was a frequent complaint of home purchasers in 2021, which prompted the Federal Housing Finance Authority (FHFA) to seek out solutions for modernizing the valuation process. One such solution is to expand the availability of appraisal waivers to home buyers in an effort to reduce the time and costs often associated with closing on a home.
Another potential for appraisal modernization is implementing more opportunities for hybrid valuations, also known as “bifurcated appraisals,” in which a third-party will conduct the in-person portion of the interior and exterior appraisal. These appraisals make better use of an appraisal professional’s expertise, and carry the potential to create a more swift, straightforward, and streamlined approach to the mortgage appraisal process.
Remote Working Environment
The pandemic has driven many industries towards a fully-remote working environment, and the home appraisal industry has also had to find adaptations for this growing normality. Last year saw a drastic decrease in the amount of appraisal professionals in the workforce, which led many appraisers to begin using desktop appraisal software to complete appraisals remotely.
Desktop appraisals were supposed to be a temporary solution. However, the real estate industry has evolved with remote technology, and these appraisals are now to be accepted by Fannie Mae and Freddie Mac beginning this month. The more widespread acceptance of remote real estate appraisals is expected to increase efficiency and productivity, leading to decreased closing times for home purchasers.
Diversity, Inclusion, and Equity
What is a home appraisal worth if it isn’t unbiased and fair? This is the question many minority home purchasers asked last year when the mortgage appraisal industry came under scrutiny when it became known that valuations of homes in minority communities were 23% lower than those in non-minority neighborhoods. Minorities were also not given the same opportunities to receive appraisal vouchers as buyers in non-minority neighborhoods. In addition to the above, the appraisal industry also lacks diversity amongst appraisers themselves, with only 2% of home appraisers identifying as black.
Hybrid appraisals may allow for more diversity amongst both consumers and the appraisal industry as a whole. Additionally, new efforts by organizations like The Property Appraisal Valuation Equity Interagency Task Force (PAVE), which seeks to find innovative ways to recruit more minorities into the appraisal profession, provide additional diversity, inclusion training, and education for both consumers and professionals, providing more insight and access to diversity data.
There is no doubt that, as the real estate industry continues to adapt and grow with new technologies, procedures, and equitable practices, so too will the home appraisal industry. We can look forward to seeing some exciting advances on the horizon, and Appraisals Unlimited will be on the forefront of these innovations to ensure we are providing the best possible service to our partners. Whether you have questions about what a home appraisal involves, or you’re looking for an experienced and honorable appraisal partner today, Appraisals Unlimited is here to give you the service you deserve.
If you’re interested in learning more about these solutions or need an appraisal today, don’t hesitate to contact Appraisals Unlimited, either by calling 781-449-7600 or emailing us at email@example.com.